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Tuesday, 7 May 2013

Nokia are an interesting case: they're still one of the companies who ship the most phones in the world, the only problem is that at the moment those phones are the low end ones and they're selling to emerging markets. As of late though budget handsets which offer better features and would be considered 'smartphones' have been eating into Nokia's market share in that segment. That means that margins get slimmer and sales contract. That's bad news for Nokia because they need to keep their volume devices shipping while they build on the image of their Lumia devices and Microsoft brings what they can to the mobile table with Windows Phone!

Today there was an Annual General Meeting for Nokia and their CEO Stephen Elop is clearly aware of what he needs to do. Indeed, before the meeting he told Reuters India that Nokia 'are continuing to renew our portfolio, which includes plans to announce innovation and new products in the Asha line in the days immediately ahead," which is good to hear. The thing is that the area where people make all of their profit is on high-end smartphones, which is why HTC has bet big on their HTC One.

On the high end front Elop reiterated before the AGM, and again to Reuters, that Nokia:

"Make adjustments as we go. But it's very clear to us that in today's war of ecosystems, we've made a very clear decisions to focus on Windows Phone with our Lumia product line. And it is with that that we will compete with competitors like Samsung and Android."

The only problem with that reiteration of their commitment to Windows Phone was that shareholders don't necessarily agree and indeed it seems that some are starting to lose patience with the Windows Phone commitment. One particular shareholder, called Hannu Vitanen, expressed his discontent by saying:

"You're a nice guy ... and the leadership team is doing its best, but clearly, it's not enough... Are you aware that results are what matter? The road to hell is paved with good intentions. Please switch to another road."

The problem for Nokia is that the Windows Phone transition was slated to take two years, it's been two years since Nokia announced that they were going Windows Phone and despite slow increases in sales, things appear to be very stunted and they are nowhere near in the same ballpark as sales of the most expensive models from Samsung and Apple.

One interesting point which came out of the interviews Reuters did with shareholders was that some people in the audience admitted that they only held shares still because of the sentimentality which came along with them. The company of the 1990's symbolised a rebirth of Finland, which could make do without its old trading partner the Soviet Union when that fell apart.

When shareholders are hanging onto their shares purely for sentimental reasons that is not good news and Nokia need to turn things around soon. We just wonder whether the change to Android is inevitable or why Nokia refuses to give it a go. Magnus Rehle from Greenwich Consulting put Elop's leadership together in a sentence, saying:

"He's managed to decrease costs but not to increase market share... Maybe they could go back to Google and say we also want to go with Android. Even if it hurts. Microsoft, they've had their chances, and are not managing to take off."

What do you think? What should Nokia do? Press on with Windows Phone or give Android a shot? Or should they let out their new Lumia flagship and Asha devices and see where things are in three months? Let us know in the comments below!

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